Government legal appeal aggravates solar industry

As the UK’s slides down the global table for green investments, the Government has decided to appeal a High Court ruling that its cuts to solar subsidies were illegal. The case was brought in December by Friends of the Earth and two solar firms, SolarCentury and HomeSun.

Rather than prolonging uncertainty to industry, jobs and confidence, the Government would do better to acknowledge that the UK’s green investments are nowhere near ambitious enough. Germany has the highest rate of green energy investment as a percentage of GDP of any country, at 1.4% of GDP. Much more needs to be done to meet our carbon emissions targets and, equally important, offer the prospect of new jobs and new skills as a way out of the recession.

In 2010, the UK slumped from third place in world investment rankings in green investment to 13th place, according to the US Pew Environment Group. The UK saw a sharp 70% decline in clean energy investment, dropping the nation out of the top 10 among G-20 countries. Investments in 2010 totalled $3.3 billion, compared with 2009 levels over $11 billion. “A sharp decline in offshore wind energy investments and uncertainty surrounding the policy perspective of a new government appeared to have stunted 2010 investments,” the study said. “Investors appear to believe that there is a high level of uncertainty about the direction of clean energy policy-making in the country.”

Germany, by contrast, ranked second to China, with $41bn of renewable energy investment in 2010. And crucially, Germany has the highest rate of green energy investment as a percentage of GDP of any country, at 1.4% of GDP.

DECC reports its green energy investment to the European Commission to comply with the Renewable Energy Directive. DECC reported that we made £2.5billion of new investment in renewable energy projects in the UK in 2010, potentially creating 12,000 jobs, at odds with the Pew study, but confirming the serious fall away in new projects compared with 2009. The Environment Secretary commented that new green projects are “supporting jobs and growth across the country, and giving traditional industrial heartlands the opportunity to thrive again.” Unfortunately, the legal challenge is a poor new year message for solar, which grew 22,000 jobs in a year, but faces bleak prospects in 2012.

Pew notes Germany’s long history of using feed-in tariffs to propel investments. In 2010, the prospect of reductions in its generous feed-in tariffs helped spur dramatic investment growth, propelling the country to second place among G-20 countries in 2010. It doubled its clean energy investment in 2010 to $41.2 billion, led by small-scale, rooftop solar energy projects. It remains one of the largest producers of solar panels in the world.

Written by Philip Pearson

Philip is a former Senior Policy Officer in the TUC’s Economic & Social Affairs Department, working on issues around climate change, energy and transport.